Assume that a social planner could redistribute initial wealth (the amounts of ? and ? that Kim and Jung have). Can they reallocate resources so that Kim and Jung reach the allocation (Xk, Yk) = (20,20) and (Xj, Yj) = (20,20) as a general equilibrium (i.e. post-trade) allocation? Can the social planner redistribute resources to make the allocation where Jung owns all the resources in the economy a general equilibrium allocation
For the rest of this question consider a two goods economy where Kim and Jung
can trade Ferraris (good x) and VR headsets (good y) with each other. Kim and
Jung both enjoy driving Ferraris and having more VR headsets (so more friends
can play the same game).
They start at the same (high) level of income. Kim has an initial endowment of (x0k, y0k) = (10,30) and Jung has an initial endowment of (x0j, y0j) = (30,10)
d) Assume that a social planner could redistribute initial wealth (the amounts of ?
and ? that Kim and Jung have). Can they reallocate resources so that Kim and
Jung reach the allocation (Xk, Yk) = (20,20) and (Xj, Yj) = (20,20) as a general
equilibrium (i.e. post-trade) allocation? Can the social planner redistribute resources to make the allocation where Jung owns all the resources in the economy a general equilibrium allocation?
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